NRG Energy plans to retire its Huntley coal plant in Tonawanda by March.

NRG informed its 79 employees at the River Road facility on Tuesday morning.

“The market conditions don’t make the plant economically viable,” said NRG spokesman David Gaier. “We don’t see any scenario under which things will improve to allow the plant to remain in service.”

At the same time, NRG’s $140 million project to convert and repower its coal plant in Dunkirk is in jeopardy. The conversion plan, approved last year, would allow the Dunkirk facility to burn both coal and natural gas. Now, that plant could be mothballed by January.

On one hand, the decision to close the Tonawanda plant should come as no surprise. However, the decision to hold up the Dunkirk project will certainly come as a jolt.

Why was NRG’s decision to close the Huntley Generating Station expected?

More than $6 million dollars in lost tax revenue is at stake for the town, its highway department, the Ken-Ton school system and Erie County.

“I think Tonawanda is in a better position because of all the planning we’ve done,” said Erin Heaney, outgoing executive director of the Clean Air Coalition. “It’s going to take state and federal resources to make the transition work.”

There are three chief reasons that led NRG to retire the Tonawanda facility, Gaier said. They include sustained low natural gas prices, low energy prices and low capacity prices paid to the plant when its power is needed during high-demand periods, such as during heat waves.

The only hope for the 65-year-old Tonawanda facility is if utility companies determine its closing would result in a grid reliability problem. A study by National Grid and the New York Independent System Operator to determine that will take up to 180 days.

“If they determine there is a problem, it is possible we could negotiate a reliability service agreement with National Grid,” Gaier said.

But don’t hold your breath. The Institute report states that retiring the Huntley plant would not create a capacity deficit in New York.

The problems that led NRG to hold off on plans for the Dunkirk plant are entirely different.

In June 2014, the state approved a 10-year contract for NRG to repower the Dunkirk facility with natural gas. Although the plant would still have the ability to burn coal, Gaier said “if and when the project goes through we have no plans to operate on coal.”

But in February, Entergy Corp. challenged the state’s decision in a federal lawsuit. The lawsuit has created “massive uncertainty” for the Dunkirk plant, Gaier said. The Sierra Club also filed separate a lawsuit in Albany County Supreme Court.

The Dunkirk plant has a contract to provide the grid power until Dec. 31. After that, the plant will cease operations until the lawsuits are settled, Gaier said.

“The lawsuit could honestly take years and we believe the losing side would appeal,” Gaier said.

There are 66 employees at the Dunkirk plant, which is the single largest taxpayer in Dunkirk, and the greater Chautauqua County area.

Closing this plant for good would be a huge hit for Dunkirk and the city’s school district.

The plant was already in jeopardy of closing before NRG had sought approval to convert most of the plant to natural gas.

Almost a thousand residents and employees supported NRG’s plans. So, this dilemma will heighten the financial concerns that the city and residents thought they had avoided.